T. Rowe Price joins growing opposition to Dell buyout

Tue Feb 12, 2013 3:16pm EST
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By Aaron Pressman

(Reuters) - Dell Inc's third-largest shareholder, T. Rowe Price Group, on Tuesday joined a growing number of investors putting pressure on Michael Dell and his partner Silver Lake to sweeten their $24.4 billion buyout offer for the PC maker.

"We believe the proposed buyout does not reflect the value of Dell, and we do not intend to support the offer as put forward," T. Rowe Chief Investment Officer Brian Rogers said in a statement.

The money manager, which declined further comment, controlled 4.4 percent of Dell shares as of September 30, according to Thomson Reuters data.

The company has said it needs a majority of investors, excluding Chief Executive Michael Dell's 14 percent stake, to approve the transaction. With T. Rowe added to the list, at least six investors with more than 18 percent of Dell shares, excluding Dell's stake, have now said they oppose the deal.

T. Rowe is not typically known as an activist investor and it is rare for the money manager to come out so publicly against a deal. It joins Dell's second-largest shareholder, Southeastern Asset Management with an 8.5 percent stake, in voicing opposition.

"You have such credible voices, voices that are highly respected in the investment management community, saying that the price doesn't make sense," said Don Phillips, president of research at Morningstar in Chicago. "A very likely outcome is that Dell is still going to go private, but a higher price point."

A spokesman for Dell declined to comment beyond their previous statements. The company has said that its board had considered many strategic options before opting to go private.

Dell had retained a management consultant to help assess its position and concluded that the proposed all-cash deal was in the best interests of stockholders, the company said in a securities filing on Monday.   Continued...

Founder and chairman of Dell computers Michael Dell passes a screen projection before speaking at a news conference in Sydney August 14, 2006. REUTERS/Will Burgess